Ike in 1985, the last time he sat for a photograph, for Forbes Magazine.

Yesterday was a gloomy day for the comics industry, as 15 Marvel staffers — including several popular editors and a couple of legendary Bullpenners — were laid off. This followed the recent layoff of COO Jim “Ski” Sokolowski. We all know the economy sucks, and that comics sales are down this year. But was that the reason for the cost cutting?

Or was it Disney? The Mouse purchased Marvel for $5 billion two years, two months ago and they are well known for being very budget conscious. Did some Disney suit look at revenue, say it wasn’t enough and order some budget cuts?

While both these scenarios sound plausible, according to Marvel insiders contacted by The Beat, neither seems to be the case. The budget slashing is the work of Marvel’s CEO, Isaac Perlmutter, an executive of legendary stinginess whose fanatical devotion to saving money —an increased interest in being hands on at Marvel — has led to the layoffs and other draconian measures inside the company.

Perlmutter and his then partner Avi Arad rode in to save Marvel from bankruptcy when they ran ToyBiz back in the late 90s. Keeping an eye on the bottom line was key to turning the company around. Bold moves like setting up their own $500 million movie studio took Marvel from penniless publishing company to a Wall Street darling with numerous stock splits. And of course, it led to Disney shelling out all that cash for a ready-made, boy-friendly franchise factory.

Although he no longer owns Marvel, Ike still runs it. And rather than sit back and enjoy his sunset years—he’s 68—with his $1.7 billion fortune, he’s chosen to keep a very active hand in running the company. In recent months he’s become even more active, showing up at the office daily. And it seems the only way he knows how to run a company is by increasing profits — not by investing in new businesses, but simply squeezing the bottom line for every last penny by any means.

If Ike thinks an expenditure is unnecessary, there’s no way around it, and anyone caught doing it is in danger of losing their job. Why did Marvel not have a booth at conventions for years? Ike wouldn’t allow it. Marvel got around this in various ways — one year at San Diego, a cookie giveaway was used to mask a barebones signing table. In other years, Marvel exhibited with its video game partner, Activision. Since becoming a movie studio, Marvel has been able to spring for more lavish and spectacular booths — remember Thor’s throne? But promoting comics isn’t in the budget.

The current problem seems to stem from a publishing forecast that didn’t get hit when the actual numbers came in. It doesn’t matter that Marvel is still a very profitable company. This is not a matter of losing money. It just wasn’t as profitable as it thought it might be. The shortfall in the margins wasn’t huge — it was less than 5% in an economy where that’s practically considered stable. But whatever the shortfall was, instead of looking at ways to build the business or bolster areas with huge potential — books, anyone? — Ike’s only reaction is to slash, slash, slash.

It’s also led to arcane practices within Marvel to keep the budget low. Reportedly, Ike gives new Marvel execs a book that says the best way to make money is to spend as few resources possible while keeping the same pace—or doubling it. Marvel employees are kind of like the rats in those caloric restriction experiments. They’re given the lowest possible amount of resources to get the job done. When something absolutely positively has to be purchased, it’s half of what was asked for.

It gets downright messy. Marvel’s new offices have only one restroom for each gender. In a company of hundreds of people. The post-lunch hour piddle line is said to be especially long and people actually stagger their lunches so as not to wait in it. There’s a human resources staff of one for the whole company. Review copies? You’ve got to be kidding. Editors have to purchase copies of the books they worked on. The precious archives of assets have dwindled over the years due to not spending any money to save them.

(We’ve heard things are even worse at Marvel’s West Coast studios operations, where some employees have surveillance cameras trained on them to make sure they don’t play solitaire.)

And we haven’t even mentioned the people. The real heart and soul of Marvel. People loves their jobs, and love the characters. Despite all the weird annoying stuff that only Marvel practices, the staff gets down to business and remains professional and dedicated. But this latest round of layoffs has, understandably, sapped morale.

And where is Disney in all of this? Reportedly, very hands off. As long as Marvel stays profitable, they let Ike run the show. That publishing is the part of the company that creates all the IP that Disney is making millions off of hasn’t yet entered the equation. At least Warner Bros. understand that DC needs to be involved in boosting their characters on the world stage.

So why? Why is Ike still micromanaging the company he made incredibly profitable and part of the biggest entertainment company on earth? Maybe Ike was just born that way. After a lifetime of success that leaves him America’s 234th richest person, maybe he just wants to stay busy and productive?

Or maybe there’s even more to it.

As we’ve mentioned here a few times, with the death of Steve Jobs, Perlmutter is now Disney’s single largest shareholder. There’s one theory floating around that goes like this: Ike wants to get more involved in Disney’s board of directors. He wants to be the showcase division. He wants to hand out that book about saving money to everyone at Disney, and spread Ike’s Way to more of the company.

When Disney bought Marvel, there was some hope that it would become another Pixar, another separate and eccentric IP farm. The reality is the exact opposite. Pixar has ping pong tables and free lunch for its imagineers. Marvel has one bathroom.

Ironies abound. Ike’s ban on carrying inventory means that Marvel’s book division has a fraction of the success it should have. To show how shortsighted this is, having a strong backlist hit is like being able to print your own money. You print more WATCHMEN, current kerfuffle aside, you sell more WATCHMEN. You print more DARK KNIGHT, you sell more DARK KNIGHT. With Marvel’s incredible backlog of timeless classics by Stan, Jack, Steve, Roy, Chris, and so on — and modern stories like CIVIL WAR and SECRET INVASION — can you imagine how much money Marvel would make if they could really invest in their bookstore program or develop NEW stories for the book trade?

So that’s the lay of the land. Ike’s deal with Disney is supposed to run five years. Reportedly, people are hoping to hang on until he’s gone to get to some kind of promised land where people can buy paper clips. Meanwhile, because they love what Marvel can be, and because they are professionals, employees carry on. And of course, up until the latest New 52 jumpstart, Marvel really had no reason to question their business model. They were #1 month in and month out. And remain a very profitable company. Marvel still has an extremely talented executive roster — publisher Dan Buckley, CCO Joe Quesada, studio head Kevin Feige, and until recently, Ski. They’ve adapted to Ike’s Way and allowed the company to even have a little bit of creative latitude.

But meanwhile, something else is happening. What IS Disney doing? They’ve hired a bunch of ex-DC editors — Nachie Castro, Mike Siglain, Janelle Asselin, Jann (Jones) Robinson — and several other ex-DC employees to do…what? Asselin was hired to package Disney comics for foreign magazine markets, where they sell in huge numbers. (You can sell Disney comics everywhere but in Disney’s home country, it seems.) Although putting out comics with Disney-branded characters from Marvel seems like a no-brainer, the Disney-Marvel synergies have been a haphazard lot. The Richard Castle tie-in graphic novel is actually selling very well, but original graphic novels remain verboten for all the reasons we’ve just enumerated. The Crossgen initiative may just have been a way to recoup Disney’s huge (and unwise) investment in CrossGen’s IP.

The problem with Ike’s Way is that it doesn’t have a plan for the future beyond squeezing other people’s ideas to the bone. The publishing world changes every day, and you have to move fast. Marvel is under pressure to respond to the New 52’s success — a Marvel reboot has been discussed, of course, but it’s still a no go for now. With fewer and fewer people left to meet the challenge of the future, the pressure will be even greater.

Marvel will get through this. It has too many great people and great characters not to. On a personal note, I just wish the people who worked there were given the resources to do their jobs. That’s all it would take.

Heidi MacDonald is the founder and editor in chief of The Beat. In the past, she worked for Disney, DC Comics, Fox and Publishers Weekly. She can be heard regularly on the More To Come Podcast. She likes coffee, cats and noble struggle.

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Comments

The Castle GN was a bomb for our stores, good story but it just didn’t move for us.

The fact that they aren’t actively supplying the backlist is a HUGE problem. No softcover of Secret Wars for example? I could flip that book weekly at all my locations if it was in stock. It’s been out of print since at least 2005 as an affordable $25 book. Money left on the table.

The fact that Perlmutter took Marvel from bankruptcy to profitability to being valued at $5 billion via investing in a high risk Hollywood movie studio startup is impressive.

How impressive? Impressive enough for Disney’s board and top execs to keep him around. Succeeding in business is hard and these people know it. They probably won’t intervene (before his contract is up) unless he does some serious damage that cannot be ignored.

It’s really a sad situation. Hopefully Marvel employees can hold out for three more years.

Zack- You mean of course, “The folks at Marvel will be just fine, except for the ones who were fired yesterday, those guys are fucked, but the ones who will be lucky enough to keep their jobs will be just fine.” Right?

That photo in no way looks like a 68-year-old man. Even his amount of money can’t buy that. Looks to me like Ike Perlmutter is one of the dreaded 1% who own 90% of the country’s wealth and refuse to share any of it. And your analysis (well done, by the way!) was spot-on in terms of the skewed way in which market failure is being define nowadays – not as losing money, but as not making enough profit.

I think both Marvel and DC (as well as other publishers) are completely foolish for not rapidly and aggressively pushing a wide range of digital distribution business models. The fact that there really is no avenue for digital pull lists or subscriptions for tablets is a joke. I know it’s a big scary new world, but you don’t greet it by dragging your heels.

Also, agree 100% on the need for creative companies to have a creative corporate culture.

That photo of Ike Perlmutter is from the Mad Men era! That guy is old now! Ike is the problem there, holding onto an old business model for dear life, fearful of what Disney might come and do to Marvel, tarnish the equity, change characters, Disney-fy everything! Meanwhile, an overhaul is likely EXACTLY what Marvel needs- some capitol investment, give those poor, hardworking people another f*cking bathroom, pay them competitive salaries, don’t treat them like dogs with no health insurance, slaving away in that bullpen! Here’s another novel idea to avoid firing people, readjust your fiscal earnings goals! This economy is in the toilet, everyone knows it, this is no fault of the employees of Marvel that toil away at their desks until odd hours of the night- approach business from a realistic standpoint! Yeah, I’m angry about the layoffs- lots of good people, some of which were with the company 15+ years that didn’t deserve to lose their job!

I also have my pull down to zero on all things marvel for no other reason that none of their comics are grabbing me right now. The last Marvel comics I bought were Strange Tales volume 1 and 2(as actual comics.)I think I saw here at The Beat that editor of those books was one of the many that were laid off! Sad to hear that being a fan of Marvel’s stuff in the past and of all the indy comics talent that appeared in those comics.

I used to work at Marvel and, as a former member of the Bullpen, can attest to the increased stinginess of the company as the years went on. Our department, responsible for handling the production of the comics that made Marvel famous, was the most underfunded in the company.

Since I left a couple of years ago, several of my friends have been let go, including several more in this mass-layoff; many of them key Marvel members and indispensable personalities. Meanwhile, the person responsible for updating Marvel’s Facebook status is still secure.

I understand that the economy’s in the crapper right now but, with a string of blockbuster movies just behind and another string just ahead, I can’t imagine the company is suffering all that much.

I remember a few years ago Marvel’s ‘booth’ at SDCC was an 8 foot folding table with no one behind it. On friday a piece of copier paper appeared on the table & handwritten on it was ‘Portfolio Reviews Sat @2:00’
The next day there was a line of about a dozen people and at 2 the guy showed up, looked at our art then left.

And surely it violates some kind of health codes or OSHA guidelines to employ that many people and not have enough bathrooms for them? Someone should consult an employment lawyer. Disney would probably sit up and pay attention to a class action lawsuit from the employees of a division they just paid $5 billion for.

I’m going to put my own company on blast…. I work for AT&T and everything in the article above sounds *exactly* like AT&T. It sucks! There’s *never* any money to do any project, all the equipment works half-assed, if it even works at all, and they expect us to work 7 days a week/10-12 hour days! And I’m a fucking engineer with an engineering degree and everything!

Corporate America just sucks and I’m sorry Marvel is now run in the same sorry state a lot of other companies are. I feel truly awful for anyone who was laid off because it’s just not right.

What is surprising to me is that no one is talking about another huge factor in the operating budget of a comic book company — the art.

Marvel has been over recent years, systematically replacing more “expensive” American artists with “cheaper” foreign artists, mainly from Brazil and Europe (Spain and Italy being a major pipeline). Take a look at the January ’12 solicits and I count roughly 25 of the 81 new books to contain artwork from these cost-friendlier artists, who are hired at a lower rate than their American counterparts. In addition, some artists here have been asked to take rate cuts just to stay on books.

The sum of all this, is that perhaps in the very near future, the Marvel Comics we love will all be outsourced to cheaper artists overseas, and the artists stateside — the other half of what makes a comic book a comic book and not just a book — will be out of work… and quite possibly, no one here will even notice.

Not that I feel like defending Marvel, but a lot of the foreign artists are from Italy. A country with a higher standard of living than we have here. They are newbs compared to some bigger American artists, which may be why they get paid less (if indeed they do).

Oops…hit Enter to soon. I was going to say…I’m related to Derek and, because of that, I’ve spoken with him at length about this stuff. He’s a very interesting guy to speak to, but I really hate that mob analogy. It’s an oversimplification.

There’s nothing wrong with figuring out where you’re inefficiently spending money and then reducing those expenditures. There is something wrong with cutting spending to the point where it makes getting work done difficult.

@zach — “a lot of the foreign artists are from Italy. A country with a higher standard of living than we have here…”

hahaha. That has to be the funniest thing I’ve read all week. First off, Italy, is at the very center of the economic debt crisis in Europe. Do you have any facts to base your assumption of “perceived” living standards? Is the price of a one bedroom apartment in Rome THAT much more than one in New York City? Secondly, those European artists might be newbies to the American Superhero market, but by no means “rookie” artists to begin with. Many are well season pros in their native countries, but they just dont’ have Xmen or Wolverine there.

They get them at a lower rate because (A) they’re foreigners and (B) they are preying on their love for American comics and willingness to work at a lower rate to draw their childhood heroes.

In the 90’s, there was a surge in Filipino artists at Marvel, but that has somewhat subsided. Look, I’m not trying to get all nationalistic here. I’m simply trying to point out an oft looked aspect of cost cutting measures in the comics industry. One that’s directly in front of our eyes, yet most people can’t see it.

Well, why don’t we all just look at the how Apple lost FIVE PERCENT of it’s stock price because they ONLY made, what, $7 BILLION in the LAST QUARTER! That didn’t “meet analysts expectations” so therefore, hey, sorry baby. No reward for bringing in $7 billion in three months. NOT GOOD ENOUGH… NOT NEARLY GOOD ENOUGH!!!

This is just more of the same “make more with less” corporate mindset. For years now, businesses have been slashing overhead to maximize profits. This isn’t just a Marvel thing. Having a low inventory is considered a good thing in the corporate world. It’s referred to as Just in Time (JIT). To some, it’s a religion.

One of the main reasons for all this is our current tax system. The top tax bracket is 35%. There was a time in this country that it was 91%. What it did was encourage businesses in the top bracket to invest in their own business. This meant getting office space with enough restrooms. This meant stockpiling inventory for future use. This meant hiring more people. If they didn’t, businesses would just pay more taxes.

Given the tone of DC’s reboot, I expect what we can expect from Marvel in reply is more antigravity cleavage, cheesecake posing, and rubber bondage frottage. C’mon, there’s a whole new generation of 12 year old boys to tap into.

>> At least Warner Bros. understand that DC needs to be involved in boosting their characters on the world stage.<<

When you say DC, I guess you are talking about Geoff Johns here as I don't think anybody else at DC is really helping guide Time Warner's Multimedia vision of the characters.

Here's the thing – Disney has had a LONG history of not publishing their own comics. When I was a kid, the Disney comics I read were liscensed out to Gold Key. In recent years, Disney has liscensed out to other publishers (Gladstone, Gemstone, Boom!, etc…) when have they shown any inclination in wanting to start their own publishing division? (Unless that's what they are doing with the DC staffers…and odds are that will be digital) Currently the Disney comics I read to my daughter are the Fairies of Pixie Hollow printed by PaperCutz.

What I'm saying is, while Ike may be making the call, I don't see Disney interferring with any of his decisions, and they may even be blessing them.

My heart goes out to those who have lost their jobs. I hope they find work at companies with a better appreciation of the value of owning their own publishing company.

It isn’t true that Disney comics sell in huge numbers in other countries. White it’s true that several countries (like Italy, Brasil and Denmark) continue to publish a decent amount of Disney comics, sales are far from being huge.
I live in Brazil and, of course, it’s the reality I know best, but I’ve been in Italy, I’ve been in Denmark and several other countries and I always look for what comics are on sale.
Here in Brazil, Disney comics stopped being huge in during the 90s. Before that, they were so popular that the local publisher (Editora Abril) had a creative division producing hundreds of original Disney comics each month. Now, that studio is history.
In Denmark, Egmont continues to publish Diney Comics but numbers aren’t huge.
In Italy, Topolino and company sales are diminishing.
The hard fact is that comics aren’t really popular with the young guys these days and the business is getting always closer to be a niche business.

Wow, I had no idea that the Marvel employees had it so bad! Not enough restrooms for its employees? Really? And to think, it was bad for comic writers and artists during Lee’s & Kirby’s careers. This is just a lawsuit waiting to happen. Time to call OHSA, and sue the company and its leach CEO Ike. Seriously, this Ike guy should take a huge chunk of his salary and invest it into the company. Ike is just like the rest of the greedy corporate America getting too greedy. One thing I want to know is who at Marvel was let go?

How about we boycott Marvel folks….I know I will reduce my pull list already hve to make room for the new DC 52 a lot of interesting stuff there. I mean Marvel cuts staff AND leaves its prices at $4 a book. Sounds like a rip-off. I am sure if DC’s sucess holds for a few months it will led to more Marvel layoffs.

I read this all differently since I worked under Ike from back in the 38th st days. The problem here is more serious- Marvel does well in the direct market with the monthlies but spent a ton of money trying to compete with DC in the book trade and got their asses handed to them. DC has Watchmen, Dark Knight, V for Vendetta, and a whole bunch of other high profile books that people who aren’t regular buyers will pick up. This casual market is a lot bigger than people realize and those books make a lot of money every year. Marvel can’t compete with that because it doesn’t have those marquee books and its publishing arm is a LOT less profitable than people know. Marvel makes its real money on movies and licensing, period. I know there are a lot of people who don’t like Ike but a lot of them don’t know how bad it was under Perelman and don’t realize how Ike was the man who saved that company and made it into the major force it is in Hollywood. This all sounds really nasty to people outside, but Ike knows publishing’s credibility will be over if Disney takes over and he also knows the real numbers, which aren’t nearly as rosy as people are led to believe. It’s harsh and probably more harsh than necessary but don’t believe that publishing is the cash cow people think it is. It definitely is not.

Just read that Marvel is actively recruiting artists from Mexico. Will they get a C level pay grade? Maybe someone should ask the Labor dept. if it’s fair to turn over so many valuable American comic jobs to other nations?

In the mid-1970s Both Marvel and DC recruited a large number of Filipino artists including Nestor Redondo, Alfredo Alcala, and ER Cruz.
The rumor was that they were being paid less than American artists.
It was never confirmed.

There have been several attempts at unions and guilds for creatives in the comics industry.
None of them ever got off the ground.

As a bookseller, the only titles which remained in print were Ultimate Spider-Man and Ultimate X-Men. Everything else rarely sold past the required three months. If it did sell consistently, like House of M, it soon went out of print.

I find FIVE different editions of “Marvels”, which should have been in print continuously since 1994 (Busiek! Ross! Early history of the Marvel Universe!). The latest paperback is the same price as the latest hardcover. (Mr. Busiek might have better sales information.)

I tried a Spider-Man endcap when the first movie was released, but there weren’t many titles to promote it (nothing like what DC does with Batman!).

The Castle book is currently Marvel’s bestseller on Amazon and BN.com. (#838 and #406, #22 and #8 among graphic novels) It, unfortunately, is selling worse than Batman: Year One (Deluxe Edition, 2007).

(And, no, I am not bashing Marvel, just pointing out the snazzy suit the Emperor is wearing, made from the skin of the elephant in the corner…)

Nate: Marvel has been recruiting from every country on earth where there are cartoonists through their CB Cebulski program. The website where you saw this “breaking news” is a genius at running a headline which would have had no meaning before the layoffs and is now seen as some sort of portent of outsourcing.

The truth is Marvel has been hiring tons of foreign artists — as has DC — for years.

“Marvel does well in the direct market with the monthlies but spent a ton of money trying to compete with DC in the book trade and got their asses handed to them.”

I can’t remember what site it was one, but I saw an analysis of trade/OGN sales in book stores once and Marvel didn’t just get its ass kicked by DC. It was like the 4th or 5th on the list with Direct Market midgets like ONI beating it out.

I hate to even suggest this, but Ike is obviously twisting his way into a deeper role at Disney. If he can prove that his “leadership” is more profitable in a recession than others…why wouldn’t they let him climb that corporate ladder at Disney?

Yes, disgusting..but likely.
What has me more worried is the effect on the perma-lance employees.
That’s what I was when I worked at Marvel as an art director in 1994-1995, and that type of position only grew with Marvel’s expansion. It’s the why pay health benefits if you can have that person be a freelancer syndrome. I personally know if a perma-lance employee that was let go, completely without reason.

Is there any chance of finding whom the Disney board listens to?
This SOB really needs to go, the destruction of Marvel Digital and the Marvel Back-list division alone is devastating Marvel’s bottom-line. It’s also not showing up as a loss due to his penny-for-a-pound policies. The overall health of this industry is being placed in jeopardy as this is hurting retailers by forcing them to inventory the product, or let sales slip away.

Ike, Can’t you go run a financial institution into the ground instead?
They’d love to have you!

And this is bad. I love BOTH Marvel and DC, tired of the Marvel/DC war(you can like BOTH at the SAME time!), and i do think this article does show some of the horrible issues Marvel has going on. At the same time, DC’s new 52 reboot has a few interesting titles, a lot of so-so books, and several bad titles in both story and art for me, but the worst part of this is the lack of organization and continuity for DC’s books, which could easily of been done but now makes no sense whatsoever, and Marvel’s lack of acknowledging it’s own continuity except by a few writers who actually BOTHER to do their research. Stan Lee created the Marvel line of books where events matter, and not to be ignored. Now both companies pretty much seem not to care at all. And, the idea of 4 Robins in under 5 years seems very silly.

I love how Perlmutter was a hero when he rescued Marvel from bankruptcy, and now he’s a villain.

I feel bad for the people who lost their jobs, and empathize with the people dealing with tight budgets (believe me, I can relate), but I can’t condemn a businessman for being a tightwad, particularly in an industry known for its numerous business failures.

There is just not enough profit margin in comics for distribution to go beyond where it is now. (Same problem since 1997). The allure of comics (beyond our GEEK LOVE) for the masses is their availability and cheapness. The average kid in the 1950s or 1960s (even 1970s) could buy a great comic for well under buck, roll it up, and take it with him or her on their bike. The model has to change in order for the medium to have a similar mass appeal again. I hope they find the answer.

Matt, I can condemn the guy. He’s in charge of Marvel. He’s the one spending money on the creative teams/printing/distribution/marketing behind 100ish titles a month that sell like crap. Marvel (and DC too, no one is getting a pass) flood the market with redundant, low-selling books, rather than focus on ways to move higher volumes of fewer titles.

I’m researching the majority shareholders, and the only person who rates above 5% is Steven P. Jobs, at 7.4% (138 Million shares)

Now, Disney paid $30 a share and gave .7452 shares of Disney stock for each Marvel share. If Mr. Perlmutter’s take is estimated at $1.5 Billion, then the assumption is that he owned approximately 50 Million shares of Marvel stock. Multiply that by 0.7452, and you get 37,260,000 Disney shares. Divide that by the 1.86 Billion total shares, and his stake is 2%, meaning he doesn’t show up on filings.

TOO MANY IDENTICAL MONTHLY COMICS!! Twenty X-Men titles, 15 Spider-Man titles, a half dozen Avengers series. They just keep throwing crap at the wall to see what sticks. The success of their titles individually is relative. Marvel doesn’t even know who their characters are any more, and until they figure it out, nothing will change.